Frigid Weather, Rising Prices Cooling Sales Contracts

Frigid Weather, Rising Prices Cooling Sales Contracts. Image courtesy of imagerymajestic / FreeDigitalPhotos.net

The record-low weather temperatures freezing parts of the country the past month are hampering pending home sales.

“Unusually disruptive weather across large stretches of the country in December forced people indoors and prevented some buyers from looking at homes and making offers,” says Lawrence Yun, chief economist for the National Association of REALTORS®.

Mixed with the cold weather, rising home prices, which are rising faster than incomes, are also giving  “pause to some potential buyers, while at the same a lack of inventory means insufficient choice,” Yun says.

NAR reports that pending home sales dropped across all four regions of the country, falling 8.7 percent nationally in December from the previous month. NAR’s Pending Home Sales Index, a forward-looking indicator based on contracts and not closings, is 8.8 percent below year-ago levels. Pending home sales are at the lowest levels since October 2011, NAR reports.

Still, Yun notes, “although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors.”

Regional Breakdown

Here’s a look at pending home sales in December across the country:

• Northeast: Contracts dropped 10.3 percent in December and are 5.5 percent below year-ago levels;
• Midwest: Contracts fell 6.8 percent in December and are 6.9 percent lower than December 2012;
• South: Contracts fell 8.8 percent in December and are 6.9 percent below a year ago.
• West: Faced with the most constrained inventory levels in the nation, contracts dropped 9.8 percent in December and are 16 percent below December 2012.

Source REALTOR® Magazine Daily News

It’s 2014 — Why Aren’t Mortgage Rates Higher?

It’s 2014 — Why Aren’t Mortgage Rates Higher? Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Economists have predicted that mortgage rates will rise in 2014, but so far, nothing’s happening. For the past month, mortgage rates have mostly stayed flat or moved lower, with the 30-year fixed-rate mortgage averaging just above 4.5 percent.

Mortgage rates are expected to move higher this year because the Federal Reserve will begin to taper its $85 billion-per-month bond-buying program, which had been helping to keep interest rates low. Mortgage rates started inching up from all-time lows last May when the Fed first hinted that it would do so.

“The simple answer is that the rate hike due to the Fed’s tapering really took effect last May/June, despite the fact that the tapering didn’t begin until December,” says Guy Cecala, editor-in-chief of Inside Mortgage Finance. “There was no need to hike rates further.”

For this month, the Fed may cut it’s bond-buying stimulus by $5 billion, but so far, it hasn’t caused mortgage rates to rise.

“Other parties have filled the void, and then some,” Dan Green, publisher of TheMortgageReports.com, told CNBC. “Mortgage bonds are rallying, and mortgage rates are dropping.”

But that doesn’t mean housing analysts aren’t still predicting an uptick in mortgage rates this year. “Mortgage rates will rise because interest rates always increase with an improving economy and a strong stock market, which appears to be the current trajectory, though they likely will rise more slowly than some have predicted,” CNBC reports.

Source: “Why Mortgage Rates Aren’t Higher … Yet,” CNBC (Jan. 29, 2014)

Obama Calls for Action on Mortgage Finance Reform

Obama Calls for Action on Mortgage Finance Reform. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

President Barack Obama, in his fifth state of the union speech last night, touted the “rebounding housing market” as one of the measures of the strengthening economy and asked Congress to reform the mortgage finance system in such a way that would keep home ownership within reach of households without risking another taxpayer-funded mortgage finance crisis.

“Since the most important investment many families make is their home, send me legislation that protects taxpayers from footing the bill for a housing crisis ever again and keeps the dream of home ownership alive for future generations,” he said in his speech.

Obama didn’t offer details, but among the proposals the administration and Congress are looking at are reforms to the secondary mortgage market companies Fannie Mae and Freddie Mac, which, along with the FHA, back the bulk of home mortgage loans originated today. NAR favors reforms that would maintain federal backing of conforming mortgage loans to help ensure the availability of safe and affordable financing in good times and bad for a broad swath of responsible home buyers through a government-chartered nonprofit entity while creating conditions that would enable the return of private mortgage capital into the market.

To keep the economic recovery on track, Obama said he would take steps to speed approval of infrastructure projects, help households build their retirement through a new savings bond called MyRAs, and would require companies working under federal contracts to increase their minimum wage to $10.10. He also called on Congress to pass legislation that would raise the federal minimum wage to $10.10.

He also pressed Congress to pass immigration reform, which he framed in part as a pressing economic matter, since immigrant households have high rates of new-business starts, among other positive economic characteristics. “When people come here to fulfill their dreams, to study and invent, they make our country a more attractive place for businesses to locate and create jobs for everybody,” he said.

He touted his administration’s increase in loans to small businesses, and he called on Congress to pass patent reforms, an issue NAR has been focusing on to help decrease abusive efforts by so-called “patent trolls” to extract licensing fees from users of certain technologies, including online property search applications and some multipurpose office machines that some real estate companies use. “Let’s pass a patent reform bill that allows our businesses to stay focused on innovation, not costly and needless litigation,” he said.

On health care, the president said 9 million people have obtained health insurance, both through private companies and expanded Medicaid coverage, and 3 million children have been added to their parents’ policies.

He used the speech to encourage people who don’t have insurance to obtain insurance by March 31, which is the end of what’s known as the open enrollment period. After that date, people who don’t have insurance could face a fee.

Source — Robert Freedman, REALTOR® Magazine Daily News

What to Know About WordPress Themes

What to Know About WordPress Themes

Both new and veteran real estate bloggers may find it difficult to choose a WordPress theme, given all the options.

First, they should consider whether they will use it as both a blog and a website, and if so, they should select one that offers menu navigation options, such as Home Page, About, Services, and Blog.

They also should choose a theme that is mobile-responsive and consider which features — such as buttons, call-to-action items, headers, and images — are built in and which must be purchased separately.

Additionally, the preferred theme should allow for videos, photos, blogs, and other types of content that are used most often; have enough columns so that it does not look overcrowded when all of the agent’s widgets are added; and come with built-in social networking icons.

Other considerations include whether the theme is search-engine friendly, whether the agent’s IDX provider offers WordPress-friendly integration and/or plug-ins, and whether the theme’s designers and developers offer technical support. Those who are not comfortable with formatting and other back-end tasks should avoid themes that need a lot of customizing or be prepared to hire someone to manage it for them.

Source: “WordPress Themes for Real Estate Agents on a Budget: 11 Tips to Get Started,” Inman

What’s on REALTORS®’ Minds

What’s on REALTORS®’ Minds. Image courtesy of nokhoog_buchachon / FreeDigitalPhotos.net

Though the market is poised to continue its gains in 2014, a number of issues cited by members of the National Association of REALTORS® have the potential to slow things down, according to a new survey.

The REALTORS® Confidence Index is a key indicator of housing market strength based on a monthly survey sent to more than 50,000 real estate practitioners. The survey routinely asks for expectations regarding home sales, prices, and market conditions. The association also asks “Questions of the Month,” which provide a snapshot of a more timely aspect of the housing market. This month’s report was created based on data gathered Jan. 6 through Jan. 10.

As 2014 begins, REALTORS® noted a number of concerns that they felt could be a drag on the recovery:

• regulations pertaining to Qualified Mortgage (QM) loans
• reductions in FHA loan ceiling limits
• a further increase in mortgage rates
• slow job growth
• uncertainties associated with the cost of flood insurance
• potential impacts from the Affordable Care Act

NAR’s outlook for the coming year is overwhelmingly positive, but the organization says that the market “is essentially moving sideways—growing at a more tempered pace than was the case last year. Future prices are generally projected to continue to increase, but at a more subdued pace than was previously the case.”

Source: NAR

Home Sales in 2013 Rise to Strongest Level in 7 Years

Home Sales in 2013 Rise to Strongest Level in 7 Years. Image courtesy of ddpavumba / FreeDigitalPhotos.net

The housing market has been experiencing a “healthy recovery” over the past two years, with home sales last year rising to the highest level since 2006, according to the National Association of REALTORS®’ latest housing report.

“Existing-home sales have risen nearly 20 percent since 2011, with job growth, record low mortgage interest rates, and a large pent-up demand driving the market,” says Lawrence Yun, NAR’s chief economist. “We lost some momentum toward the end of 2013 from disappointing job growth and limited inventory, but we ended with a year that was close to normal given the size of our population.”

Existing-home sales rose 1 percent in December 2013 compared to November and reached a seasonally adjusted annual rate of 4.87 million.

Existing-home sales for all of 2013 reached 5.02 million sales, 9.1 percent higher than 2012, and the largest rise since 2006 when sales were at 6.48 million at the close of the housing boom, NAR reports.

Home prices were also on the rise in 2013, up 11.5 percent over 2012, with a median existing-home price of $197,100 last year compared to $176,800 in 2012. It was the strongest gain in home prices in a year since 2005, when home prices rose 12.4 percent, NAR reports.

NAR President Steve Brown says that with job growth expected this year, home sales should hold despite rising home prices and higher mortgage rates.

“The only factors holding us back from a stronger recovery are the ongoing issues of restrictive mortgage credit and constrained inventory,” Brown says. “With strict new mortgage rules in place, we will be monitoring the lending environment to ensure that financially qualified buyers can access the credit they need to purchase a home.”

Housing Recovery Regional Snapshot

Here’s a look at how existing-home sales fared in December and for the year across the country:

• Northeast: Existing-home sales fell 1.5 percent in December but remain 3.2 percent higher than December 2012. Median price: $239,300, up 3.6 percent from year ago levels
• Midwest: Existing-home sales dropped 4.3 percent in December and are 0.9 percent below year ago levels. Median price: $150,700, 7 percent higher than December 2012.
• South: Existing-home sales rose 3 percent in December and are 4.6 percent higher than December 2012. Median price: $173,200, up 8.9 percent from a year ago.
• West: Existing-home sales increased 4.8 percent, but are 10.7 percent below a year ago. Median price: $285,000, up 16.0 percent from December 2012.

source REALTOR® Magazine Daily News

Nearly Every U.S. City Can Expect a Good 2014

Nearly Every U.S. City Can Expect a Good 2014. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Nearly every city in the U.S. is expected to see economic growth in 2014, according to a new report by the U.S. Conference of Mayors. The city expected to lead the country in economic growth and job gains is Naples, Fla.

Other large cities expected to see big growth this year: Raleigh, N.C.; Atlanta; and Austin, Texas, according to the report, which was conducted by IHS Global Insight.

Cities that were hit hard by the decline in manufacturing or the housing crisis are also forecasted to see a big turnaround. For example, Youngstown, Ohio, and Buffalo, N.Y., are expected to see economic growth of 1.6 percent and 1.5 percent, respectively.

“The key thing in the northeast was the stabilization of housing,” says Jim Diffley, a senior director at IHS and lead author of the report. “When prices normalized and people weren’t underwater anymore, small but positive job growth has been able to stimulate spending.”

One of the biggest turnaround towns is expected to be Shreveport, La., which, the report shows, will grow by 1.6 percent after a 5.2 percent decrease last year.

College towns, such as Austin, Charlottesville, Va., and Lawrence, Kan., are expected to be strong performers this year. However, large urban areas, such as New York, Chicago, and Los Angeles, are expected to grow more slowly than the national average. Diffley says that many large cities such as those have already recovered many of the local jobs that had been lost in the recession, and that’s why they likely will only experience slow growth this year.

Overall, IHS predicts that 340 of 363 metro areas will see their economies grow by at least 1 percent this year. That’s an increase from 183 metros last year. What’s more, 69 of those metros are expected to see growth of 3 percent or more. Only seven of the 363 metro areas will likely not see their economies grow this year, still an improvement over last year’s 97 metros that saw their economies stagnate.

“Two thirds of metros have still not gotten back to 2007 or 2008 peak levels of employment, and half of those won’t get there for another three years,” Diffley says. “Financial crises do not produce normal recessions in the U.S.”

Source: “U.S. mayors: Economy’s gains will spread widely,” USA Today (Jan. 22, 2014)